Foxtel and Ten confirm alliance
Foxtel today confirmed it will acquire 15% of Network Ten while Ten gets a two-year option to take a 10% stake in Presto TV.
Foxtel will invest up to $77 million in Ten Network Holdings Limited as part of a broader equity raising by the broadcaster.
As part of the deal, Ten will take a 24.99% stake in Multi Channel Network, the advertising joint venture between Foxtel and Fox Sports, which will assume responsibility for Ten’s sales from September 1.
Once the Foxtel investment receives regulatory approval, Ten will provide programming content and a limited amount of contra advertising to the streaming service co-owned by Foxtel and Seven West Media. Foxtel will nominate a director to the Ten board.
Ten proposes to issue new shares to Foxtel at 15 cents per share, plus a renounceable entitlement offer to Ten shareholders to raise up to a further $77 million at the same price. That's a 42% discount on the 26 cents closing price on Friday.
It said the new capital of up to $154 million will reduce debt and provide additional financial flexibility to continue its ratings momentum.
While there will be efficiencies from combining Ten's sales with MCN, which represents 68 pay-TV channels, the vast majority of Ten sales staff are expected to keep their jobs.
Ten executive chairman and CEO Hamish McLennan said: “Today's announcement represents an important milestone for Ten and the conclusion of the strategic review process initiated by the board last year. It positions Ten to drive long-term value for shareholders.
“The board believes the agreements with Foxtel and MCN will materially enhance Ten’s business and better equip it to respond to the challenges of the ever-changing media and advertising landscape.
“By joining forces with MCN, Ten will gain new efficiencies, improved data capability and provide broader integration opportunities for its advertising clients. The combined sales operation will provide advertisers a new way to reach consumers across all video content distribution platforms.”
Foxtel CEO Richard Freudenstein, said, “We believe our investment in Ten is a win-win for Ten and Foxtel. With Foxtel’s local knowledge and expertise, and MCN delivering synergies and improved advertiser access, this proposal delivers the best long-term solution for a revitalised, competitive and profitable Ten.”
Each proposal, other than the sales rep agreement, is subject to regulatory clearances including by the ACCC, which could take up to three months.